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Explaining index-based livestock insurance to pastoralists

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Author Info

  • John McPeak
  • Sommarat Chantarat
  • Andrew Mude

Abstract

Purpose – The purpose of this paper is to present the methods and findings of an experimental game designed to extend the concept of index-based livestock insurance in northern Kenya, and analyze patterns of game play. The paper is designed to inform others who may be attempting something similar to this work in other developing country agricultural settings. Design/methodology/approach – The paper presents the following: descriptive context of the issue, explanation of the game design to match the conditions in the area, details of how the authors explained the game, and regression analysis of play by participants. Findings – Games designed to reflect key elements of the local production system can be an effective way of explaining financial products to rural producers in developing countries. Research limitations/implications – It remains to be seen if the extension effort leads to more informed consumers of insurance products, which the authors hope to address in future work. Also, the approach described in this paper is very labor intensive, which could limit use in a wide ranging extension program. Social implications – The authors were able to explain the idea to groups that were mixed: female and male. It will be interesting to see if there are any gender dimensions to insurance use. In addition, with competing claims to livestock with complex property rights, there is a need to monitor how insurance interacts with social ideas of livestock ownership. Originality/value – This is a completely new idea in the area of arid and semi-arid livestock production, the challenge is pronounced, and as insurance becomes more important in the development economics toolkit, the authors believe others can benefit from seeing what they have done.

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal Agricultural Finance Review.

Volume (Year): 70 (2010)
Issue (Month): 3 (November)
Pages: 333-352

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Handle: RePEc:eme:afrpps:v:70:y:2010:i:3:p:333-352

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Web page: http://www.emeraldinsight.com

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Related research

Keywords: Assets management; Insurance; Kenya; Livestock;

References

References listed on IDEAS
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  1. McPeak, John, 2006. "Confronting the risk of asset loss: What role do livestock transfers in northern Kenya play?," Journal of Development Economics, Elsevier, vol. 81(2), pages 415-437, December.
  2. Barry J. Barnett & Olivier Mahul, 2007. "Weather Index Insurance for Agriculture and Rural Areas in Lower-Income Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(5), pages 1241-1247.
  3. Travis J. Lybbert & Christopher B. Barrett & Solomon Desta & D. Layne Coppock, 2004. "Stochastic wealth dynamics and risk management among a poor population," Economic Journal, Royal Economic Society, vol. 114(498), pages 750-777, October.
  4. Lybbert, Travis J. & Galarza, Francisco B. & McPeak, John G. & Barrett, Christopher B. & Boucher, Stephen R. & Carter, Michael R. & Chantarat, Sommarat & Fadlaoui, Aziz & Mude, Andrew G., 2010. "Dynamic Field Experiments in Development Economics: Risk Valuation in Morocco, Kenya, and Peru," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(2), April.
  5. John McPeak, 2004. "Contrasting income shocks with asset shocks: livestock sales in northern Kenya," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 263-284, April.
  6. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
  7. John G. McPeak & Christopher B. Barrett, 2001. "Differential Risk Exposure and Stochastic Poverty Traps Among East African Pastoralists," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 674-679.
  8. Christopher Barrett & Paswel Phiri Marenya & John Mcpeak & Bart Minten & Festus Murithi & Willis Oluoch-Kosura & Frank Place & Jean Claude Randrianarisoa & Jhon Rasambainarivo & Justine Wangila, 2006. "Welfare dynamics in rural Kenya and Madagascar," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 248-277.
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Citations

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Cited by:
  1. Sarah A. Janzen & Michael R. Carter, 2013. "After the Drought: The Impact of Microinsurance on Consumption Smoothing and Asset Protection," NBER Working Papers 19702, National Bureau of Economic Research, Inc.
  2. Janzen, Sarah A. & Carter, Michael R., 2013. "The Impact of Microinsurance on Consumption Smoothing and Asset Protection: Evidence from a Drought in Kenya," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151141, Agricultural and Applied Economics Association.

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